This is an entirely free service. No payments are to be made. Also send me The Ultimate Guide to Profiting From Derivatives and sign me up for Profit Hunter,a free newsletter that focuses on identifying short term money making opportunities.Download NowSubscribe to our free daily e-letter, The 5 Minute WrapUp and get this complimentary report.
We hate spam as much as you do. Check out our Privacy Policy and Terms Of Use.

Amusement Parks: Serious business

Infotech, Communication and Entertainment form the golden triangle of investments in the market currently. In the USA, which has the most developed entertainment market, entertainment spend ranks ahead of even clothing and healthcare and in many parts of the world, entertainment is the fastest growing sector. A small part of the entertainment industry is the amusement parks. They can generate a lot of economic activity in their location, create a traffic flow and tourist centre and can even put a remote location on the map as the Walt Disney World Resort did for Florida.

In India however, the amusement park industry India has been bogged by the same problems that had earlier bogged industries such as steel (in the mid eighties) fertiliser (in the late eighties) and cement aquaculture and finance companies in the mid nineties). The absence of a long term strategy, the gold plating of capacities (over invoicing of assets and inflation of project cost) and the presence of capricious promoters looking out for a fast buck.

In India almost 75% of the amusement parks that have been set up are water parks with hardly any exclusive rides. Contrast this to the Walt Disney World Resort which includes Magic Kingdom, Disney–MGM Studios and Disney’s Animal Kingdom apart from 13 resort hotels and a complex of villas and suites, a retail, dining and entertainment complex, a sports complex, conference centres, camp grounds, golf courses and water parks.

The revenue model of the Indian amusement parks is too dependent on gate receipts unlike in the West where merchandising is the major source of revenues as well as profits. Again the Disney model is an illustration where the creation of brands such as Mickey Mouse and Donald Duck have become household names and freed the company from its geographical constraints. The profit margins are also obviously the highest in this activity.

What is required is a long term perception from the promoters and the reduction of entertainment taxes by the state governments (the various state government’s charge taxes almost equivalent to what they charge movie theatres). Only then will the domestic tourist (who comprises almost 90% of the tourist traffic in India) be compelled to look at amusement parks as a serious source of entertainment.

LEGAL DISCLAIMER: Equitymaster Agora Research Private Limited (hereinafter referred as 'Equitymaster') is an independent equity research Company. Equitymaster is not an Investment Adviser. Information herein should be regarded as a resource only and should be used at one's own risk. This is not an offer to sell or solicitation to buy any securities and Equitymaster will not be liable for any losses incurred or investment(s) made or decisions taken/or not taken based on the information provided herein. Information contained herein does not constitute investment advice or a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual subscribers. Before acting on any recommendation, subscribers should consider whether it is suitable for their particular circumstances and, if necessary, seek an independent professional advice. This is not directed for access or use by anyone in a country, especially, USA or Canada, where such use or access is unlawful or which may subject Equitymaster or its affiliates to any registration or licensing requirement. All content and information is provided on an 'As Is' basis by Equitymaster. Information herein is believed to be reliable but Equitymaster does not warrant its completeness or accuracy and expressly disclaims all warranties and conditions of any kind, whether express or implied. Equitymaster may hold shares in the company/ies discussed herein. As a condition to accessing Equitymaster content and website, you agree to our Terms and Conditions of Use, available here. The performance data quoted represents past performance and does not guarantee future results.